DO I QUALIFY

CHAPTER 13/7 PROBLEMS

Bankruptcy Myths

1. I WILL LOSE MY HOME IF I FILE FOR BANKRUPTCY?This is FALSE. If you have a mortgage and you can afford to pay that mortgage, the bank will not try to take your home. Even if you are delinquent on your payments, you can catch them up in a Chapter 13 bankruptcy.

2. YOU WILL LOSE ALL YOUR PROPERTY.Certain assets are exempt from liquidation in a Chapter 7 bankruptcy, and a Chapter 13 bankruptcy does not result in a loss of your assets at all. (See Bankruptcy Exemptions under Bankruptcy Information to the left)

3. I SHOULD CASH IN 401K OR RETIREMENT FUNDS BEFORE I FILE BANKRUPTCY.This is FALSE. Retirement funds are protected in bankruptcy. They are exempted from seizure by creditors. If you decide to draw upon your retirement funds prematurely to pay creditors, you will have to pay taxes on them that you may not be able to afford. You should consult with a bankruptcy attorney before drawing any money out of your retirement fund.

4. MY FAMILY, NEIGHBORS AND FRIENDS will know that I filed for bankruptcy.This is FALSE. In most cities newspapers do not publish the fact that you filed bankruptcy. The filing is usually listed in the U.S. Bankruptcy Court public records, however, only banks and creditors usually pay attention to the public record. Most clients who do not discuss the matter with their friends soon learn that most people are unaware of the filing.

5. IF I FILE FOR BANKRUPTCY, MY CREDITORS WILL STILL HARASS ME.This is false. Bankruptcy law provides for an automatic stay. As soon as you file for bankruptcy, creditors are not allowed to contact you. The law prohibits a creditor from attempting to collect from a debtor during an active bankruptcy. After you complete your bankruptcy and receive your discharge the dischargeable debts are no longer legal debts.

6. FILING FOR BANKRUPTCY COULD COST YOU YOUR JOB.False. Federal law (U.S.C. Sec. 525) prohibits any employer from discriminating against you because you filed bankruptcy.

7. I CAN CHOOSE WHICH DEBTS OR PROPERTY I PUT INTO THE BANKRUPTCY?False. You have to list all of your debts. Bankruptcy is not designed to favor just the debtor. It would not be fair to the creditors if you got to pick and choose which debts you could list and which ones you would continue to pay.

8. IF YOU ARE MARRIED, BOTH SPOUSES MUST FILE BANKRUPTCY.If you are married, it is not required by law that you both file for bankruptcy. However, It is important that your attorney determine whether joint filing will be in your best interest. Louisiana is a community property state so, in most situations you would not need to file with your spouse unless your spouse has debt that was incurred before your marriage.

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